Hulu: Candy on a Stick

hulu News Corp and NBC’s joint venture now has a name, “Hulu”.

It brings back the winter memories of street vendors in Beijing shouting out “Hulu! Huuuuu lu!  Bing Tang Hulu!”.  The little sing-song cry is as recognizable to Chinese kids as the good humor ice cream truck music here (If you hear ice cream truck music in Beijing, it means you are about to get sprayed by a street washer truck).  You can buy Hulu on every street corner for pennies.

You can see tasty pictures of Hulu.

The company is probably doomed, and probably will never be big in China.  But it’s a great name.  Better than Gu Ge.

(BTW, in this climate of alarm over Chinese food contamination, it is interesting to note that Tang Hulu vendors often sprinkle a bit of sand in the candy coating to make the hulu crunchier.  Sand!  In the food!  And people eat it without complaining!)

Anti-China Propaganda Orgy

The American news media is now fully in the grips of a bipartisan anti-China orgy of propaganda.  The collusion between parties is far more complete than anything I’ve ever seen in American media.  Every day, the crescendo gets worse.  Today I saw “specials” running on three different channels purporting to cover the “crisis” of dangerous toys from China.  “YOUR KIDS ARE NOT SAFE!” the headlines scream.  The New York Times is running a Sunday special explaining how China is polluting the world at “epic proportions” and abusing human rights.

Don’t fall for it.  The only thing of epic proportions here is hypocrisy.  I cannot believe that watchdogs like GNN have not yet called shenanigans on the press.  And it is especially ironic and saddening that this overt conspiracy of the economic hitmen is succeeding most successfully in duping those very people who claim to stand up to the global pillaging by multinationals.

Toys: something like 80% of the world’s toys are manufactured in China.  If anything less than 80% of toy recalls originated in China, I would be mighty suspicious.  But you have to wonder, why toys, and why now?  The bulk of toys have come from China for many years now — are we to believe that suddenly all of them went bad at the same time?  In fact, the reports don’t actually claim any change in the quality of toys from China.  Most of the toys now in dispute have been sold in America for years.  All that has changed is that AS OF TODAY, ALL THOSE TOYS YOU’VE BEEN BUYING FOR YEARS, ARE DEADLY!!!

Strangely, China seems to have been selectively shipping those deadly toys only to the U.S.  Or the Europeans are as yet too stupid to panic.  Since they are too stupid to realize the danger they are in, I recommend we send over U.S. military to liberate the Europeans from dangerous Chinese toys.  It’s the least we can do for our white brothers across the pond.

Of course, white people are no longer having enough babies to replace the population, so the “YOUR KIDS ARE IN DANGER!” ploy is of limited use in stirring up jingoist passions against the Chinese.  Thankfully, the same protective instincts kick in when you tell someone that “YOUR PET IS IN DANGER!”  Now we find that the Chinese have secretly been poisoning all of America’s fluffy, adorable little Caucasian pets with some additive that we’ve never heard of before (one is reminded of Dr. Strangelove and the “body fluids”).

It’s no longer stuff that your kids and pets put in their mouths, though — it’s even the fish you buy at Walmart.  Nobody does the math to figure out what percentage of Chinese-originated food fails inspection versus food from other ports.  It is considered sufficient journalistic integrity to simply sound the klaxon, “A PIECE OF FOOD FROM CHINA DID NOT PASS INSPECTION!!”

We have known for decades that the American press thrives on scare-mongering based on stuff you put in your mouth.  It’s only now that we realize it was all just practice for the day when we had a trade partner who provides more than 50% of our goods.

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But the whole oral fixative complex is child’s play compared to the real game.  The real game is about pollution and carbon credits.  The popular media would have you believe that multinationals only outsource to China for cheap labor.  But there is a far more important reason to outsource to China — it’s a different jurisdiction for pollution and carbon credits.  Outsourcing based on displacement of energy consumption has accelerated in the past decade — I know several people in both the U.S. and China engaged in such projects for the government and multinationals.

The concept is simple.  Let’s say that I manufacture plastics to sell to toy manufacturers, and this is a very energy-intensive process with many raw materials.  Let’s say my manufacturing process produces a million tons of carbon per year.  If I move the factory to China, and strike a deal with some local province to help them build the requisite energy production locally, I save on logistics costs (since the toy factories are in China now) and some production costs (due to kickbacks, and the fact that R&D is still partly government-funded).  And the pollution stays in China.

And when all of our computers, monitors, and worn-out toys become toxic waste, we ship it back to China.

It’s a thing of beauty.  All of the toys still go to kids in America, and all of the profit still flows to American companies.  But now the pollution gets blamed on China.  The civilized world can circle round China, like the self-righteous johns circling round the prostitute, and demand that she buy carbon credits to wash away her filth.  Since we took all the profits to begin with, the only choice for China is to trade it off with debt.  At a minimum, the carbon credits scam can be used to make sure that China’s overall position relative to the EU/US block is never too advantageous to her.  The lunatic fringe of nationalists can applaud such a brilliant economic hitman ploy, if it were not for the fact that China’s threat to U.S. is already vastly overrated. 

Especially in the case of the toy market, the hardline approach being taken by American toy companies is sickening and immoral.  The Chinese companies were already completely uncoordinated; putting each other out of business in self-destructive price wars and commoditizing things which should be protected behind moats.  Buying commodities from China is like stealing candy from babies.  It was shameful exploitation to begin with.  In the midst of this, the U.S. toy companies are now using threats, intimidation, and jingoism to get further concessions.  The Chinese are already being exploited far beyond any morally acceptable point — whipping up the American population into an anti-China frenzy to get more concessions will only make things worse.  As it is, at least two export-oriented officials in China have lost their lives in the past month, and undoubtedly hundreds of thousands of workers are facing harsher working conditions.

Flowers from America

If anyone ever asks you to send them flowers from America, because “if it’s from America it is more special”, don’t do it.  The idea that flowers can be more special based on some “branding” goes against 2000 years of tradition.  Flowers are special because they are beautiful and then they die.  Sticking in a flower in a shipping container so that you can open it just in time to see it die is just wrong.  I’ve heard that half the roses in America come from Chile anyway, and that’s bad enough.  Now you want to drop-ship flowers from Chile to China?  Don’t even think of it.

The tradition comes from at least the first century B.C.  In the Book of Wisdom, pseudo Solomon chastises the unwise for saying (2:7-8) “let no flower of the spring pass by us.  Let us crown ourselves with rosebuds, before they be withered.”  The original context, where rosebud-gathering was seen as bad, endured 1700 years until Robert Herrick penned the famous words Gather ye Rosebuds while ye may.

Of course, poets have been writing about fleeting youth and beauty for a long time.  For example, Sappho’s melancholy poem from 630BC.  But the two examples given above are the definitive “roses and fleeting beauty” references.

So that’s why you give roses — to symbolize that you’re so smitten by beauty that you couldn’t care less about the future.  You don’t give roses to symbolize that you have discriminating taste or brand buying power.

 

The 15th Wonder

Almost by accident recently, I found myself at what is surely the 15th wonder of the world, which I relate here for history.  Long after the world descends into nuclear winter, the remembrance of this place will inspire myths of toy heaven, labyrinths of many rooms, and santa claus.

30 years ago, YiWu China was a tiny little farming village outside Hangzhou.  I was visiting the area for other reasons, but upon hearing about the “product mall”, I decided to go and take pictures.  Today YiWu holds the largest product marketplace in the world (by a long shot).  The main product “mall” is 15 million square feet; there are several other product malls.  The main one went from 4.5 to 15 million in just the last few years, and is undergoing another big expansion by 2008.  It is difficult to imagine the scope of the place without visiting, but here is a quick virtual tour.

YiWu First Stage Market

No longer a small farming village, it has an airport and 6 or 7 international hotels.  The tower in back of the photo is a Best Western – Best Western in China is actually quite luxurious; and far more comfortable than most Chinese hotels for foreigners.  The whole city is designed for foreign buyers.
 YiWu First Stage Market
Another stretch of the same mall.

 

YiWu First Stage Market Lobby

This is just a foyer attached to the front.  You can see through the windows left and right as the cubes stretch off the camera.

Many Rooms of Toys

The tunnels stretch endlessly forward, left, and right.  Each cube is smaller than a shipping container, and hawks the wares of one vendor or supplier.  Rows and stacks of cubes, each one packed with toys and a girl to take orders.

Here is one guy’s description of YiWu, which gives some idea. 

http://www.expreference.com/2006_07_01_archive.html

Note that he is personally vested in selling his massage chairs from a different city, and I saw many such chairs in YiWu – so he will soon be out of business.  This is perhaps why he makes some negative and inaccurate comments about YiWu (and he gets his information from another foreigner); but overall it gives a good picture.  Most of the foreigners there are buyers looking for nothing but a low price.  Primarily Russian, Arab, Indian, and so on (places with expansion of second-stage manufacturing) who are probably pissed about being sent to YiWu to do business.  This could explain expreference’s negative comments about attitude.  In actuality, the girls seem to spend their time hanging out, talking, playing “da di”, and dozing.  They’re quite friendly to tourists and families with money to spend.

In addition, he’s speculating about this area being based purely on “cheapness”, but that still doesn’t explain the location far inland from the port.  This area is close to Hangzhou, which has always been the center of Chinese commerce.  When Marco Polo visited China, he exclaimed that the amount of commerce in Hangzhou was unimaginable to people back in Europe – indeed it was the largest city in the world and the largest center of commerce for a long time.  In addition, this has been for thousands of years a primary farming center for China – this area is resource-rich, so farmers in this area have always been self-sufficient.  They have been businessmen for thousands of years.  While the other areas of the country have fishermen, laborers, bureaucrats, and academics; this is the area that has always been about business/farming.

It is pretty simple – if you are a businessman, you want to be near your family rather than in Shenzhen, Guangzhou, Beijing.  The stretch from Hangzhou to Shanghai (the port) is nothing but factories.  Many have turned their farmland into factories, and many more have pushed the factories far out to where the laborers are, and simply have factory HQ sitting on the land near Hangzhou.  What has happened is they have seized the front-end of the value-chain, which is selling the product to foreign buyers.  As more product is sold through here, the pull is for more product to be sold, and it’s a snowball effect.  Now a Chinese manufacturer would be crazy to try to sell product to foreigners without selling through YiWu.  Here is a small sample of YiWu selling through Alibaba storefronts.

http://search.live.com/results.aspx?q=yiwu+site%3Aalibaba.com

YiWu specializes in one part of the B2B chain – specifically in finished product, and in parts for manufacture of finished product – and specifically in stuff that is attractive to a large number of buyers.  That is, you can find top quality massage chairs, robotic toys, down to 20 different specialized factories for keychains – but you won’t find a manufacturer of a specific type of platen that would only be used in manufacture of Xerox copiers.

This is the category of manufacturing where China currently dominates the world.  90% of the toys in the world come from China now, and you can go see them all by flying to YiWu and staying at the Best Western.